By 1963, Enzo Ferrari had built an empire at the nexus of art and engineering. To focus on racing, he wanted to sell his business. From Henry Ford II’s perspective, the idea seemed perfect. The marriage would combine Ford’s manufacturing powerhouse with Ferrari’s unrivaled technical expertise. Seems like an easy decision. If only.

System 1’s Win

This story is less clear than the Countrywide example. Ford and Ferrari had both largely followed Kahneman’s method leading up to their final meeting in Maranello. Diligence was mostly data-based, and both sides realized the clear benefits they could offer one another (such as racing pedigree and manufacturing bandwidth). Kahneman’s System 2 initially prevailed. Initially.

There was a caveat to the deal, however: Enzo Ferrari wanted to maintain complete control of the racing division. Henry Ford II, however, wanted the ability to approve which races the team would run, and have some say into Ferrari’s holy of holies: how the cars were built. The deal capitulated right as the contract was to be signed in Maranello. More than anything, neither Enzo nor Henry could bear the other’s authority over the racing team. Kahneman would probably say the cause is obvious: emotional data, and System 1, got in the way.

2 Solutions

The first solution: data-driven compromise. Maybe Ford set the racing budget, and Ferrari ran the team. Maybe Ford would run American races while Ferrari would handle the European races. Neither option was explored.

The second solution: know yourself. Enzo and Henry should have had a sense of their own mental strengths and weaknesses. They should have asked themselves why they felt so strongly about control and what the other side was likely to tolerate. In this way, clarity of self for the CEOs probably would have led to a successful deal.